IP Law Daily Patent applicants can pursue class action against USPTO for Privacy Act violations
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Thursday, February 27, 2020

Patent applicants can pursue class action against USPTO for Privacy Act violations

By Cheryl Beise, J.D.

USPTO may have mishandled applicants’ personal information though operation of Sensitive Application Warning System (SAWS) program.

The federal district court in the District of Columbia has declined to dismiss a putative class action filed against the USPTO for mishandling of the personal information of certain patent applicants in violation of the Privacy Act. The representative plaintiffs—Paul Morinville and Gilbert Hyatt—sufficiently alleged that the USPTO’s operation of the Sensitive Application Warning System (SAWS) program violated the Privacy Act by failing to accurately maintain records and maintaining prohibited records describing patent applicants’ exercise of rights guaranteed by the First Amendment. According to the plaintiffs, the SAWS program, which was discontinued in 2015, "blocked issuance of patent applications identified as ‘sensitive’ by PTO personnel" based on the identity of the applicant(s) and without informing applicants that their applications had been flagged under SAWS (Morinville v. USPTO, February 26, 2020, Kollar-Kotelly, C.).

The plaintiffs brought three Privacy Act claims against the USPTO arising from the agency’s failure to accurately maintain records due to the omission of the SAWS flags and SAWS reports from patent application files: (1) failure to accurately maintain records due to the omission of the SAWS flags and SAWS reports from patent application files; (2) maintenance of prohibited records describing patent applicants’ exercise of rights guaranteed by the First Amendment; and (3) engaging in a prohibited collection of information by gathering information from internet sources rather than directly from patent applicants. The plaintiffs also filed a claim under the Declaratory Judgment Act for a declaration of their rights due to the USPTO’s failure to accurately maintain records.

In addition to suing on their own behalf, the named plaintiffs also brought the suit on behalf of a proposed class of similarly situated persons under Federal Rules of Civil Procedure 23(b)(2) and (b)(3). The proposed class consisted of "all patent applicants whose applications have been flagged under SAWS at any time."

Before the court was the USPTO’s motion to dismiss. The court addressed each claim in turn.

Failure to maintain records. The plaintiffs contended that USPTO violated the Privacy Act by omitting indications of SAWS flags and SAWS reports from patent applications." They further argued that the omission of these records from the patent applications resulted in determinations adverse to the patent applicants whose applications were flagged under the SAWS program.

The Privacy Act provides for a civil remedy when an agency "fails to maintain any record concerning any individual with such accuracy, relevance, timeliness, and completeness as is necessary to assure fairness in any determination relating to the qualifications, character, rights, or opportunities of, or benefits to the individual that may be made on the basis of such record, and consequently a determination is made which is adverse to the individual." 5 U.S.C. § 552a(g)(1)(C).

The USPTO’s primary argument for dismissing the plaintiffs’ claims was that neither patent applications nor SAWS material are records covered under the Privacy Act. The USPTO contended that the information contained in an application’s file is about the proposed invention, not about the patent applicant. The USPTO further contended that the SAWS flags and reports are also not records about an individual because the reasons for flagging an application under SAWS relate to the specific characteristics of the proposed invention, not to the patent applicant.

The court rejected the USPTO’s argument, noting that the plaintiffs alleged that the USPTO "flagged patent applications based on the identity of the applicant or applicants." The plaintiffs further alleged that in preparing SAWS reports, USPTO personnel were directed to conduct "a Google search of the invention, the inventors, and owner or assignee." The court itself pointed out that the USPTO "itself has promulgated regulations explaining that patent application files contain Privacy Act-eligible records which include the ‘[o]ath or declaration of applicant including name, citizenship, residence, post office address and other information pertaining to the applicant’s activities in connection with the invention for which a patent is sought.’ 78 Fed. Reg. at 19,243 (emphasis added)."

The USPTO next argued the plaintiffs’ claim should be dismissed because omission of a SAWS flag or report from a patent application file was not the cause of any adverse determination. According to the USPTO, the only harm from the omission of the SAWS information was that applicants were unable to contest the USPTO’s classification of their patent applications.

The court, however, noted that under the Privacy Act implementing guidelines, a determination is adverse if it "result[s] in the denial of a right, benefit, entitlement, or employment by an agency which the individual could reasonably have been expected to have been given if the record had not been deficient." The plaintiffs alleged that, after a patent application received a SAWS flag, a patent could not be issued for that proposed invention. The court determined that the plaintiffs sufficiently alleged that an adverse determination—a constructive denial of their patent applications—had occurred and was caused by the omission of the SAWS material from their patent applications.

Declaratory judgment. The plaintiffs brought a claim under the Declaratory Judgment Act that also was based on the failure to properly maintain records. The plaintiffs argued that there was a dispute as to the USPTO’s obligation, under the Privacy Act, to include the SAWS flags and reports in the patent application files. The plaintiffs sought a declaration of their rights under the Privacy Act.

The USPTO contended that the plaintiffs were precluded from getting declaratory relief under the Declaratory Judgment Act because the Privacy Act provides for injunctive relief. The court declined dismiss the claim as duplicative, unnecessary, or inappropriate at this early stage. "Here, Plaintiffs are not seeking declaratory relief under the Privacy Act but are instead seeking such relief under the Declaratory Judgment Act," the court said. The court also found the cases cited by the USPTO to be inapposite.

First Amendment activities. The plaintiffs second Privacy Act claim was based on the USPTO’s alleged maintenance of prohibited records concerning patent applicants’ exercise of their First Amendment rights. The plaintiffs alleged that "SAWS flags and SAWS reports describe patent applicants’ exercise of rights guaranteed by the First Amendment." The USPTO countered that SAWS materials did not describe how the patent applicant exercised his or her First Amendment rights.

Under 5 U.S.C. § 552a(e)(7), an agency shall "maintain no record describing how any individual exercises rights guaranteed by the First Amendment unless expressly authorized by statute or by the individual about whom the record is maintained or unless pertinent to and within the scope of an authorized law enforcement activity."

Taking all inferences in the plaintiffs’ favor, the court found that the plaintiffs sufficiently alleged that the SAWS material may constitute a "record describing how any individual exercises rights guaranteed by the First Amendment." The plaintiffs alleged that some of the SAWS material concerned politically charged or sensitive subject matter and that the USPTO conducted internet searches on patent applicants as a part of developing the SAWS reports. The court found that the plaintiffs alleged sufficient facts to create an inference that at least some of the SAWS material collected about individual patent applicants described how patent applicants exercised their First Amendment rights.

Information-gathering methods. Lastly, the plaintiffs brought a Privacy Act claim based on the method the USPTO used to collect information for the SAWS flags and reports. The USPTO argued that, even if the SAWS material could result in an adverse determination, the plaintiffs failed to establish that the method of information gathering was the cause of the adverse determination. The USPTO contended that "the complaint lacks allegations that describe how the Googling of information to complete a SAWS report, as opposed to collecting that information from Plaintiffs directly, has an adverse effect on Plaintiffs."

The court agreed with the USPTO. The plaintiffs nowhere alleged that the USPTO’s collection of information from sources other than the patent applicants caused an adverse determination, the court noted. Instead, the plaintiffs alleged that the maintenance of the SAWS flags and reports had caused their patent applications not to be granted. More was required for relief for a claim under the Privacy Act, the court said.

Mootness of Morinville’s claims. The USPTO sought dismissal of plaintiff Morinville’s claims as moot. The USPTO argued that Morinville had notice of his claims sometime prior to 2015 when a patent examiner told him that his patent application had "entered a secondary review process." The court, however, found that dismissing Morinville’s claims as untimely was premature on the current record. The court declined to conclude from the face of the complaint that Morinville knew or had reason to know that he had a Privacy Act claim against the USPTO more than two years prior to the date he filed the complaint in June 2019.

This case is No. 1:19-cv-01779-CKK.

Attorneys: Mark Wendell Delaquil (Baker & Hostetler, LLP) for Paul Morinville. Michael Joseph Gerardi, U.S. Department of Justice, for the USPTO.

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